While researching the red bibs in Kunitsu-Gami and their possible significance, I learnt no one knows why these bibs are added to statues.
But it's speculated to honor children who died.
(My research is what began my Spirit Stone post but I never posted on the bibs themselves as it turned out to not go anywhere. It's not unique to Kunitsu-Gami.)
I thought child mortality, or even infertility, was an issue in Kunitsu-Gami but actually, in the past Japanese children would die young often. So this is rather normal.
But I wonder in times of woe, when the Seethe attack, is infertility an issue? The Path takes at least a year. It confirms all 4 seasons pass in the game.
What does the pact affect? How bad do things really get?
Some photos of statues:
They are in many places. Along with pinwheels, too. Pinwheels can represent the cycle of life, reincarnation or to honor dead children.
But here, they're put by the Goddess:
(there's a belief that the maidens who worshiped the agricultural(mountain) goddess fused with her and were worshiped as well. This is what happens to Yoshiro)
A short that touches on the Red Bibs topic: